"[T]he Board applied McLaren, a significant 2023 decision holding that merely offering a severance agreement with overly broad confidentiality or non-disparagement provisions may violate the National Labor Relations Act. Applying that standard, the Board found Prime Communications violated Section 8(a)(1). The Board ordered Prime Communications to rescind the unlawful provisions, notify affected former employees, and post a remedial notice." [Prime Communications, No. 16-CA-309916 (Apr. 7, 2026)] MORE >>
"ERISA coverage provides for many advantages, and the related compliance requirements are not particularly onerous. This article discusses what causes a severance plan to be subject to ERISA, the consequences that result, and the advantages of ERISA coverage." MORE >>
"Under the bill, if an employee subject to a non-compete is fired without cause, the agreement is unenforceable unless the employer provides severance pay or another form of monetary compensation. However, if the employee is fired 'for cause', the non-compete agreement is enforceable. The proposed law also requires employers to disclose any severance benefits or payments at the time the non-compete agreement is executed." MORE >>
"The Sixth Circuit affirmed summary judgment for an employer after finding that a former employee's severance release was knowing and voluntary under all five factors the court applies, rejecting her claims of racial discrimination, gender discrimination, retaliation, and hostile work environment. The decision is a practical checklist for any employer that uses severance releases." [West v. Dow Chemical Co., No. 25-1681 (6th Cir. Mar. 10, 2026; unpub.) MORE >>
"[T]he federal government has moved to dismiss a suit from a trio of former Morgan Stanley financial advisers that had filed suit regarding a [DOL] advisory opinion that said the bank's deferred compensation plans likely aren't protected under ERISA." [Sheresky v. U.S., No. 25-8935 (S.D.N.Y. complaint filed Oct. 28, 2025; defendant's motion to dismiss filed Mar. 11, 2026)] MORE >>
"[T]he Fifth Circuit affirmed summary judgment in favor of a change-of-control severance plan, holding that the plan conferred discretionary authority on the administrative committee and that the committee did not abuse its discretion in concluding that the plaintiff failed to establish 'Good Reason' for resignation." [Miller v. Anadarko Petroleum Corporation Change of Control Severance Plan, No. 25-20113 (5th Cir. Feb. 26, 2026] MORE >>
"From a company perspective, lump sums are operationally simple but hit budgets immediately. Salary continuation spreads costs over time but adds administrative work....For employees with stock options ... [m]ost companies (62%) continue to rely on a 90‑day exercise window.... Nearly a third (28%) offer a tenure‑based approach with longer windows for longer service. Only 10% extend beyond 90 days, even though employees often push for more time." MORE >>
"What truly distinguishes severance pay is not its purpose, but its trigger: termination. The court adopted a straightforward definition used in prior Colorado cases: severance pay is 'payment by an employer to its employee beyond the employee's wages upon termination of the employment relationship.' " [Sommers v. MarketPlace Realty, LLC, No. 24CA2155 (Colo. App. Dec. 24, 2025)] MORE >>
"Because the incentive award amount was tied in part to revenue generated by each adviser, the court labeled it a 'commission,' not a bonus -- a distinction that ultimately pushed the entire arrangement into ERISA territory.... The DOL noted that bonus programs often use complex formulas, include tenure-related rewards and sometimes allow payouts after certain types of termination from the program, such as death or disability. None of those features, in the agency's view, automatically transform an incentive plan into a pension plan designed to provide retirement income." [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. Jul. 9, 2025); DOL Advisory Opinion 2025-03A]MORE >>
"The Sheresky plaintiffs allege that Morgan Stanley improperly lobbied the DOL in an 'ex parte process' for over a year ... They further allege that Morgan Stanley is impermissibly utilizing the Advisory Opinion in the arbitrations to argue that because the DOL's 'official position' is that the Program is not governed by ERISA, the financial advisors' claims are frivolous and must be dropped, and that Morgan Stanley will seek attorneys' fees if the arbitrations proceed." [Sheresky v. Chaves-DeRemer, No. 25-8935 (S.D.N.Y. complaint filed Oct. 28, 2025)] MORE >>
"Three former Morgan Stanley financial advisers ... [allege] the agency acted unlawfully when it issued an advisory opinion siding with Morgan Stanley about whether certain deferred compensation plans are protected under [ERISA]. The lawsuit ... claims the DOL's [Advisory Opinion 2025-03A] violated the Administrative Procedure Act and unfairly interfered with ongoing arbitration proceedings." [Sheresky v. Chaves-DeRemer, No. 25-8935 (S.D.N.Y. complaint filed Oct. 28, 2025)] MORE >>
"There are several arbitrations and even lawsuits over the Plan which Morgan has been defending for years. In those cases, the plaintiff-advisors maintain that the Plan is subject to ERISA and violates its minimum vesting rules. Morgan has been winning many arbitrations. However, in July the United States Court of Appeals for the Second Circuit held the Plan was subject to ERISA and the plaintiff's in the class action could go to arbitration with their claims.... The DOL's Advisory Opinion gives Morgan even more ammunition to defend the arbitrations and may even chill future claims." [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. Jul. 9, 2025).] MORE >>
"For wealth advisors and RIAs, the implications of this ongoing dispute extend beyond the legal maneuvers. Deferred compensation remains a powerful retention tool across the wirehouse and brokerage landscape ... If courts or regulators were to determine that such programs fall under ERISA, it could significantly alter how firms structure advisor pay, adding compliance burdens and limiting forfeiture provisions that firms rely on to retain talent." [DOL Advisory Opinion 2025-03A; O'Neill v. Morgan Stanley, No. 24-00358 (FINRA Aug. 8, 2025)] MORE >>
"The DOL's opinion, which was requested by Morgan Stanley outside counsel, comes on the heels of a string of arbitration victories for the firm in disputes over deferred compensation. Over the past two years, it has successfully defended at least five consecutive challenges, saving millions of dollars and further solidifying its stance that its plans are lawful and enforceable." MORE >>
"[In] the Department's view, the mere fact that the terms of the program contemplate limited situations where an award could be paid after termination of employment does not implicate a deferral of income of the kind contemplated by ERISA section 3(2)(A). Thus, the Department has no reason to believe that the deferred incentive compensation program is an employee benefit pension plan under ERISA section 3(2)(A) as a result of such surrounding circumstances." MORE >>
"Shortly before a reduction in force took effect, an employee was terminated for cause and informed that she was not eligible for benefits under the employer's ERISA-covered severance pay plan. Rather than file an appeal under the plan's claims procedures, the employee sued under state law ... [T]he First Circuit concluded that the employee had merely attempted an 'end run' around ERISA with allegations that she relied on misleading statements when not claiming benefits under plan procedures. But ERISA provides the exclusive cause of action in precisely such circumstances." [Orabona v. Santander Bank, N.A., No. 24-1905 (1st Cir. Jun. 16, 2025)] MORE >>
"A recent First Circuit decision ... illustrates how ERISA preemption of state law protects employers where a former employee asserts state law claims alleging improper termination of employment to avoid paying severance benefits. This post describes the benefits of ERISA preemption, provides an overview of the First Circuit decision, and highlights key aspects courts look to in determining whether a severance program is an ERISA plan." [Orabona v. Santander Bank, N.A., No. 24-1905 (1st Cir. Jun. 16, 2025)] MORE >>
"Morgan Stanley argued that the district court's commentary on the merits of the underlying ERISA claims rendered its order effectively a 'denial' of arbitration, and therefore appealable. The Second Circuit rejected this novel theory, citing the statute's plain language and declining to interpret a granted motion as a constructive denial.... Morgan Stanley separately sought a writ of mandamus ... to erase the district court's conclusion that the compensation plans were governed by ERISA. But the Second Circuit made clear that such relief is only available in extreme circumstances." [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. July 9, 2025; unpub.)] MORE >>
"[This article provides] answers to questions finance and HR leaders often ask about executive severance, including how to structure it at different growth stages, common mistakes to avoid, and how to stay competitive while meeting the expectations of the board and investors." MORE >>
"if severance is exempt from Section 409A, then: [1] The severance payments can be accelerated without penalty.... [2] The severance package may be able to be replaced with a new arrangement with different payment terms without a Section 409A 'substitution' risk ... [3] The six-month delay that applies to specified employees at public companies does not apply to exempt severance." MORE >>
"The Supreme Judicial Court’s (SJC) decision reversed a lower court’s ruling that had disrupted the long-held understanding that the MNAA categorically excludes nonsolicitation agreements, and it further clarified the scope of the MNAA’s reach.... [T]he Miele case remains a cautionary tale for employers when seeking to reaffirm restrictive covenants, a common practice when an employee resigns." [Miele v. Foundation Medicine, Inc., SJC?13697 (Mass. S.J.C. June 13, 2025)] MORE >>
"Under the proposed law, employers must: [1] Notify employees of their right to consult an attorney about the severance agreement; [2] Provide employees with a 'consideration period' to review the agreement, not less than 21 calendar days; and [3] Provide a seven-day revocation period following execution of the agreement, which would become effective only after the revocation period has expired." MORE >>
"The trial court found that a mistake had occurred -- but denied reformation.... To reform a contract, there must be proof of a mutual agreement to different terms before signing.... On appeal, the First Circuit didn't reach the reformation question.... Because both readings were plausible, the contract's meaning couldn't be resolved as a matter of law. The district court should have considered extrinsic evidence -- emails, discussions, or draft language -- before deciding who was right." [Dahua Techology USA, Inc. v. Zhang, No. 24-1350 (1st Cir. May 12, 2025)] MORE >>
"The Court engaged in careful statutory analysis of the employee's argument that the term 'competitive activities' in the definition of forfeiture for competition agreement is broader than the phrase 'certain specified activities competitive with' in the definition of noncompetition agreement. Finding it would render the statute internally contradictory, the Court rejected this argument." [Miele v. Foundation Medicine, Inc., SJC‑13697 (Mass. S.J.C. June 13, 2025)] MORE >>
"Following the merger, the surviving corporation, Microchip, announced that it would no longer honor a severance plan, that Atmel had adopted prior to the merger, for employees who were fired without cause. Two such former employees ... filed an ERISA class action lawsuit ... asserting that that Microchip further violated its fiduciary duties under ERISA by encouraging employees to sign the release of claims in exchange for significantly lower benefits than they were allegedly entitled to under the severance plan." [Schuman v. Microchip Technology Inc., Nos. 24-2624, 24-2978 (9th Cir. Jun. 5, 2025)] MORE >>
